BOJ Kuroda warns of risks from falling regional banks’ profits

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda on Monday warned that declining profits at regional banks could weigh on the economy by potentially destabilizing the financial system.

Regional banks’ core profitability has continued to fall due to prolonged low interest rates as well as persistent declines in the population and the number of firms, Kuroda said in a speech at a seminar.

“We should be mindful of the possible consequences, including any downward pressure on the real economy from the financial system” as financial institutions tend to become more cautious about taking risks when their profits decline, he said.

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